Suppose two economic models give the same predictions --- but one is simplistic and unrealistic in its assumptions while the other is rich in detail and resembles the real world more closely. If the sole goal of the economist is to predict, then the economist should use the simple and unrealistic model.
Answer the following statement true (T) or false (F)
True
Rationale: If two models predict equally well, then it makes more sense to use the simple model that's easy to use, even if the assumptions are unrealistic.
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Susie grows corn in her backyard garden to feed her family. The corn she grows is not counted in GDP because
a. it was not produced for the marketplace b. it is an intermediate good that Susie will process further before feeding her family c. goods produced using land are not included in GDP d. the corn has low value e. it reduces the amount of corn she will buy at the store
the main policy making body of the federal reserve system is the
What will be an ideal response?
If a country wants to keep its exchange rate fixed, it must
A) allow its currency value to vary with market supply and demand in foreign exchange markets. B) be a member of the IMF. C) vary the amount of its national currency supplied at any given exchange rate in foreign exchange markets when necessary. D) eliminate its foreign exchange reserves.
Which of the following best describes a typical business cycle?
A. Economic expansions are followed by economic contractions. B. Inflation is followed by unemployment. C. Stagflation is followed by inflationary economic growth. D. Trade surpluses are followed by trade deficits.